By CHRIS MCGANN, ANGELA GALLOWAY AND CRAIG HARRIS, P-I REPORTERS

Published 10:00 pm, Monday, April 16, 2007

OLYMPIA -- The Legislature said no, so the Sonics say they'll have to go.

For the third consecutive year, the Seattle Sonics failed to convince the Legislature that taxpayers should help finance a new arena for the NBA franchise.

"This is a staggering and quite likely a debilitating blow to our efforts to develop a world-class arena facility. Clearly at this time the Sonics and Storm have little hope of remaining in the Puget Sound region," owner Clay Bennett said in a statement.

After a meeting between the governor and House and Senate leaders Monday evening, it was apparent that the Sonics' proposal did not have enough support to pass.

"We are not going to vote on anything this session," said House Majority Leader Lynn Kessler, D-Hoquiam.

The glitz and gleam of a new $500 million arena in Renton, the promise of an economic windfall and threats of leaving the region if taxpayers didn't pony up for the new Oklahoma City-based owner were not enough to force a deal.

Sonics spokesman Jim Kneeland said it was unlikely the team would go before the Legislature again next year. The team has said its current KeyArena home is inadequate.

"We will be doing some conversations, but at this point we have a hard deadline of Nov. 1," Kneeland said.

Lawmakers who support the team said discussions would continue.

"We just feel that there is enough need," said Senate Ways and Means Chairwoman Margarita Prentice, D-Renton. "And we haven't had a chance to really work the deal and let people know how flexible Mr. Bennett has been. It's time to have more discussions."

"What is the deadline? How flexible can we be? What are his commitments, legally, to the NBA? That's what we are going to explore," Prentice said.

A clause in the purchase contract Bennett signed in July for the team states that if a new arena in the Seattle area is not agreed upon by Oct 31, 2007, the team could move to Oklahoma City, home to Bennett and his investment group.

Bennett has said the Sonics would play at least one more season in KeyArena even though the team is contractually obligated to play there until 2010.

To move by the start of the 2008-09 season, Bennett would have to petition the NBA by March 1, according to NBA rules.

Even if they want to pull up stakes the Sonics are bound to KeyArena and the city of Seattle with a lease agreement that runs through 2010. If the new owners were to seek to end their lease early, they'd have to negotiate a buyout with the city.

That may not be easy.

"We have a lease through the 2010 season and it's enforceable and we expect the Sonics to honor it," said Deputy Mayor Tim Ceis. "If the Sonics want to do something else they have not contacted us in that regard and we would have to be made whole."

How much would that cost, "that would be subject to negotiations should they approach us," Ceis said.

"This is all speculative. ... We have not had any contact with the Sonics organization in quite some time."

Seattle's Finance Director Dwight Dively said getting out of the lease could be costly for the Sonics.

"Our view is that we have an absolute guarantee that they will be here through the end of our lease and if they wanted to leave before that we would demand substantial financial damages," Dively said.

Such damages would go well beyond several million dollars in annual rent. In addition, the team provides the city revenues from ticket taxes, parking fees and luxury suite sales. Further, the city would likely seek compensation for projected lost tax revenues on restaurant and other sales around the arena before and after game time.

"The city would obviously want to be fully compensated for what we would have had," said Dively, who declined to estimate the potential value of such losses.

In his statement, Bennett said he believed the team had gone to "extraordinary lengths with significant time and resources to craft a proposal for a global-caliber multipurpose event facility that would be a valuable public asset for the region for years to come and have minimal impact on taxpayers."

Bennett said the team remains willing to work with the governor and Legislature.

Renton Mayor Kathy Keolker said she was disappointed and questioned why lawmakers wouldn't let voters decide the fate of the Sonics. The team had said it would support a public vote on the funding package.

"It is unfortunate that the Legislature refused to allow this local option funding package to be discussed here in King County," Keolker said in a statement. "This proposal contained no new taxes and used a tool that is already in place."

Throughout this year's legislative session, Speaker of the House Frank Chopp, D-Seattle, had maintained that a new Sonics stadium was not a priority and in the end it was widespread lack of interest in the House that killed the bill.

Earlier in the day, Kessler said she was doing a vote count to determine if there was enough support to bring the bill up for a full House vote. She did so with the understanding that, if there were enough interest on both sides of the aisle, Chopp would bring the bill to the floor.

After the full court press from the team and Prentice, the support did not materialize.

The lack of support thrilled Chris Van Dyk, leader of the anti-arena group Citizens for More Important Things.

"We believe the Legislature will move on to more important things and a lot of the more incredible things they've done this session will get public attention," Van Dyk said.

In its last iteration the Sonics' proposal called for a King County tax package that could provide as much as $300 million for the new stadium by extending existing stadium taxes. They included hotel/motel, rental car and restaurant taxes.

In addition, the proposal would have authorized King County to use about $150 million from a state sales tax credit that is being used to pay for Safeco Field bonds. Beginning in 2012, the sales tax credit would be used for other public facilities such as KeyArena and youth ball fields.

The Sonics also requested a $100 million contribution for the city of Renton.